Fresh concerns over Britain’s spending on foreign aid have been raised after
it was disclosed that it is helping support projects in Iran and China.

The Department for International Development (DfID) is a key supporter of the World Bank, a body tasked with helping develop poorer countries through a combination of grants and interest free or cut-rate interest loans.

The bank, set up after World War II, is funded by developed countries who put in a pool of cash which provides capital it can lend on interest-free or easy terms to poorer countries, and use as collateral to raise further funds on the international money markets. It also provides grants from cash given by donor countries, of which Britain is fifth largest.

However the level of aid given to the World Bank last night raised new concerns over how aid funds are spent – and there is also concern over some of the World Bank’s loan schemes.

Inquiries by The Sunday Telegraph found a number of projects that bore only limited relevance to Britain’s development goals. They include:

* £50 million in loans for a road safety campaign to improve Iran’s appalling road accident rate. It was scheduled despite the Iranian president, Mahmoud Ahmadinejad, holding a PhD in traffic management.

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* A £30 million loan towards the coast of a Confucius “cultural heritage protection” project in China.

* £122,000 for a “radio reality format” project to encourage women in central India to use water more efficiently

Last year DfID contributed £953.4 million to the World Bank. The money is used to both give direct aid and to provide collateral for loans. Britain is the bank’s fifth largest shareholder, behind America Japan, Germany and France. British taxpayers therefore have a stake in every World Bank loan.

Additionally Britain is still giving aid to “middle income” countries through its contributions to the World Bank, despite the Government’s recent pledge to restrict handouts to only the neediest nations. In a major review of aid 18 months ago, ministers promised a “tighter focus” on just 27 of the poorest nations.

However among those in receipt of current World Bank grants are Moldova, Cambodia and Kosovo, which were on a list of 16 countries that DfID stopped direct funding to after a review in early 2011.

The three countries are currently in receipt of grants totalling £56 million from the World Bank’s International Development Association, a fund to which Britain paid £2.64 billion, or 12 per cent of the total, during the last round of contributions in 2010.

On the basis of that 12 per cent share, it means that roughly £7.6 million of the grants to Moldova, Cambodia and Kosovo came from the British tax payer.

The money is part of the 0.7 per cent of national income that Britain spends on overseas aid, which critics say must either be reduced or more carefully monitored while the country is facing austerity measures.

Matthew Sinclair, Chief Executive of the TaxPayers’ Alliance, said: “The Government rightly reduced the number of countries in receipt of British aid in order to better target where our cash is going.

“But unfortunately it is now clear to taxpayers that this is undermined by institutions like the World Bank and the European Union, which are putting our cash in the direction of countries to which ministers have specifically decided against sending aid.”

This week, the bank will hold its annual meeting in Tokyo, when discussions will begin on the next round of handouts, which are due to be finalised next year.

Tory MPs want Britain to use the meeting to call for much bigger contributions from emerging economies, especially if they want a greater say in the bank’s affairs.

The United Kingdom’s generosity towards the World Bank also stands in stark contrast to the contributions made by the newly-wealthy nations like China and Russia, which now boast more billionaires than Britain.

Beijing, which spent £25 billion on hosting the 2008 Olympics, gave only £98 million to the World Bank in 2010, while energy-rich Russia, whose coffers have been hugely boosted by high oil prices, gave just £70 million.

Meanwhile India, which claimed recently that it no longer needed aid from Britain, gives nothing at all to the World Bank and instead remains of the biggest recipients of its aid.

The paucity of their contributions is in spite of the bank agreeing in 2010 to increase the say of emerging economies in how it is run, which was done by boosting the voting rights of countries including India, China, and Brazil.

Such nations say that the bank should no longer be dominated by “Western” governments, even though they still contribute the lion’s share of its aid budget, which is topped up every three years.

“As a layman, I would have imagined that the voting rights should follow the money,” said Philip Davies, the Tory MP for Shipley.

“By anybody’s standards, we appear to be overpaying relative to other countries, and it is also more than we can afford in this time of austerity.

"I would be all for a change in voting rights as long as it was accompanied by some reasonable change in contributions.”

DfIFD said that overall, the British government believes the World Bank to be one of the most effective aid agencies in the world, doing a good job of spending donors’ money.

However, the 2011 multilateral aid review did find that some of the projects the bank supported, either by grants or loans, were not “national priorities”.

A DfID spokesman said that the Government had not yet made any decisions about its future contribution to the World Bank’s aid programmes.

But the spokesman added: “We are committed to a faster programme towards poverty reduction worldwide – this includes pushing other countries to increase their contributions.”